Multiple Time Frame Trading

[Colonel B 10]

Yea can you define "multiple time frames"? Yea yea silly question. Its multiple time frames so how complicated can that be? Are you trading 1 sec, 5 min, 10 min, and 30 min and using moving averages on the ES? I bet that wont work. How about 1 sec, 1 minute, 5 minute moving averages on the ES? I bet that wont work either. How about 1 minute, 5 minute, and 30 minute with moving averages. Good luck with that too. The point is that there needs to be a bit more info to be able to give an accurate answer. I think Tams said every one looks at multiple time frames and I think he is right (not exact words by the way). If your time frames are too far apart then you will end up getting in too late. Simple enough

 

Another thing If you are waiting for "When larger time frame participants trade in one direction" you wont be trading very often and you wont make that much. That doesn't happen often and is more of the minority of the time. Most of the time it is the smaller time frame guys that move the market. The ES anyway. I am not sure about options and stocks but my guess is that its the same over there. From your post it looks like you are doing it backwards. Instead of figuring out where and when the big guys are doing OTF buying figure out where the short term guys are at.

 

About that scalping thing. Basically someone kind of already mention some of this but scalping is taking 100-200 trades in 1 session for 1-2 ticks. The retail market has distorted the original definition and turned it into something else. I guess if you are taking more then 3 trades a day or you are not pulling out 10 points out of the ES then you are a scalper. I doubt that there were ever any real scalpers in the E-Mini. Chances are if you are against more then 3 trades a day, shooting for 10 points, and are not looking at least days out most likely you are not making good money. In the major future markets anyway.

[Savant 10]

Yea can you define "multiple time frames"? Yea yea silly question. Its multiple time frames so how complicated can that be? Are you trading 1 sec, 5 min, 10 min, and 30 min and using moving averages on the ES? I bet that wont work. How about 1 sec, 1 minute, 5 minute moving averages on the ES? I bet that wont work either. How about 1 minute, 5 minute, and 30 minute with moving averages. Good luck with that too. The point is that there needs to be a bit more info to be able to give an accurate answer. I think Tams said every one looks at multiple time frames and I think he is right (not exact words by the way). If your time frames are too far apart then you will end up getting in too late. Simple enough

 

Another thing If you are waiting for "When larger time frame participants trade in one direction" you wont be trading very often and you wont make that much. That doesn't happen often and is more of the minority of the time. Most of the time it is the smaller time frame guys that move the market. The ES anyway. I am not sure about options and stocks but my guess is that its the same over there. From your post it looks like you are doing it backwards. Instead of figuring out where and when the big guys are doing OTF buying figure out where the short term guys are at.

 

About that scalping thing. Basically someone kind of already mention some of this but scalping is taking 100-200 trades in 1 session for 1-2 ticks. The retail market has distorted the original definition and turned it into something else. I guess if you are taking more then 3 trades a day or you are not pulling out 10 points out of the ES then you are a scalper. I doubt that there were ever any real scalpers in the E-Mini. Chances are if you are against more then 3 trades a day, shooting for 10 points, and are not looking at least days out most likely you are not making good money. In the major future markets anyway.

 

 

Thank you for that info

[Vince50 10]

Define "scalper"... ?

 

true scalping has long since gone the way of the algo HFT bot... because only they are fast enough to simultaniously have contracts on the bid and on the offer, and they have the speed to pull one side or the other (or both) should liquidity start to dry up...

 

so I'm not sure how you would define scalper... I daresay I am a successful "scalper"... but I don't limit my trades to small pips and time frames. I also hold trades for days... and for just the right trade, I'll hold it for months. But I average well over 30 round turn transactions per day, and my average hold time is a few hours, but I also have an average win size of about 21 pips, and and average losing trade size of about 17 pips...

 

If i'm really "scalping"... it's in futures, not spot, and there my average hold time is less than 30 minutes.

 

Oh no, my man, you are a long term trader in my world. First of all the REAL derinition of scalping is" Too many trades holding too little time for too little profit to be able to overcome the spread and commissions and slippage." Thats the real definition.

 

But to me, what I would call a scalper is merely someone who is using very small time frames, often 1 minute charts or volume charts that change every 30 seconds and they are trying to squeeze lets say 5-10 pips out of a trade the minute the last bars high is broken and get out at the first sign of a retrace of that bar. In fact a scalper holding more than 15 minutes is a "home run" for him. Ive seen scalpers get in on a one min bar as it breaks over that doji and after they are up 5 pips set the stop at be + 2pips or pennys, and when they get stopped they book that 2 pips as a win!!! Thats not a game I want any part of.

 

Of course you have the MANUAL scalpers that try trend following but will only buy on the bid and set the stop loss 2 ticks(lets say s&p futures) away and they keep hoping for that one move where it just keeps going and they are willing to get out at be to get that one 20 pip move. Or...I simply know traders who use 5 min bars to trade and as soon as price goes 3 pips or 3 incements in futures against them they jump out on the "theory" theat they can jump back in again when the trend resumes.(as if it ever stopped! lol). hERS WHAT I SEE IN MOST SCALP ROOMS. They try to buy the future on the bid, give it 15 seconds and if no fill then pay the offer,whatever it is..on getting out same thing, they try to sell on the offer, and wait 15 seconds. thats too much work for me!!!! -)

 

But any scalperish type style where a guy is usually looking to go in and out, in and out for like 2 hours, make a measly 100 dollars days pay and quit is an animal that I think The forex industry wants back and therefore it makes sense that they would have 1 pip spreads as they would love a guy that trades 4 times an hour round turn than twice per day. There seemed to be no reason for equitoes to get off decimalization as that 1/16 or "steeny" as we brokers called it seemed like nothing. Its like a 3.3 pip spread today in spot forex and we both know that at the end of the year its murder!!! They may even eventually offer 1/4 pip spreads as they devise ways to get your money in hidden fees but that would only be the small firms dealing with suckers.

 

Tell you another thing I learned as a professional poker player and also a casino dealer. In most poker games, if the house is cutting 5% each pt, there will be no winners as a rule by the end of the night. The pros argue since they play so tight and infrequently it doesnt addect them. Mathemeticians also argue that point. That the "cut' only affects the loose and bad players. But I know something they dont. What happens to that expert player who is sitting there for 3 hours or more just waiting to get that pair of aces or kings to jump in real aggressive and take the suckers money with? Well......depending on how much damage the house cut did at that point, he may wind up with half the size pot he would have had with no or a small cut becaus the bad players lost their money and went home as the cut ate them up!!! Do you see the analogy on a slightly longer term basis in our game. Equities, futures, forex, name it.......all the really bad traders whose money we need to feed off of are always disappearing...because they all died a death of "overtrading." Overtrading by itself should produce a break even result though. why should overtrading hrt? because of the spread, the the slippage,commission and all the antics they pull behind the schenes to make sure you are always paying too much and getting too little when getting out. dont ask me how, they do it. people think because they bought on the bid they got over? i will just say this, i worked for a firm that was a market maker in a stock that was .49bid/.50 offer. When people bought they paid 50 cents per share. when they sold (always months later for some reason lol) the bid went from .49 to .02 in 45 seconds. We'd call them back, tell them a huge seller came in, they should by some more!!!! so now they hold the stock another 6 months!!!! If the y called the regulators on my firm we had another mm go on the offer for us to say he knocked the stock down himself. 3 mms working in cahoots can outwit 99% of regulators. So many games they play i can tell you many, but anyway we are getting off topic, the legit regular spread, will eat up any scalper that exists. plus sooner or later he gets stuck in a trade and loses his whole weeks "pay" in one trade.we all know this......

 

BOTTOM LINE: Im day trading 5 years, swing trADING 15, and I can count on one hand how many traders who were making a living 5 years ago are even still around. where did theier money go? The spread monster. Picture a gremlin from pac man or a rat with sharp tiny teeth gobbling away at every trade you make. Let me prove something....remember in the late 90's a trader could make a fortune just following momentum and be flat by end of day. why are all those guys broke? because the bigger fool, the other traders who would take his stock off his hands went broke first, then the next level down and the next, and thenext. there has to be at least 50 levels of traders from the bottom of a move to the end of a move whether its a 5 min chart but especially if using day charts. as they grind out the traders who always buy at the top, guess what...................we have smaller and smaller tops for a while as thois eguys who make the hill into a mountain disappear and now we pros have to wait, sometimes many months, in a bad cycle, a couple of years for new suck- I mean traders to come around. The spread monster is always eating and unlike the lion, never sleeps.

[Savant 10]

OMG, this is quite a long reflection.. I definitely agree with some of your thoughts..

[Vince50 10]

OMG, this is quite a long reflection.. I definitely agree with some of your thoughts..

 

Thank you. I had always dreamed of starting a trading room that no one ever tried before. And that is where every person takes one trade, and it could be based on anything he wants, from the most simple to the most complex, and as his trade is unfolding he will "walk us thru the trade.' It would be incredible how our mistakes and silly assumptions would be weeded out 10x quicker than if we left it up to ourselves. And we would be forced to copy our best trade of the day and let everyone see it, and same with worst and.....I will tell you a secret, 50% of the traders will realize it isn't for them within 3-9 months, not years. See, my feeling is, if you invest more than 4 years learning about trading, you damn well better be sure you can make a living at it. Sadly no one who is not profitable after 4 years can ever make that claim. A room like that would help people speed up their learning curve...about themselves! And with a room full of people we could automate and backtest systems and strategies in days, not months!!!!! I wonder if they will let me start a p[oll in here. I want to ask: What would you do if you knew you could never be successful at trading? Ive always thought that answer was sooooo interesting because TRADERS are unique and interesting. Winners or not.

[Obsidian 10]

...I wonder if they will let me start a p[oll in here. I want to ask: What would you do if you knew you could never be successful at trading? Ive always thought that answer was sooooo interesting because TRADERS are unique and interesting. Winners or not.

 

you can post a poll in a new thread ?

[BlueHorseshoe 10]

Oh no, my man, you are a long term trader in my world. First of all the REAL derinition of scalping is" Too many trades holding too little time for too little profit to be able to overcome the spread and commissions and slippage." Thats the real definition.

 

But to me, what I would call a scalper is merely someone who is using very small time frames, often 1 minute charts or volume charts that change every 30 seconds and they are trying to squeeze lets say 5-10 pips out of a trade the minute the last bars high is broken and get out at the first sign of a retrace of that bar. In fact a scalper holding more than 15 minutes is a "home run" for him. Ive seen scalpers get in on a one min bar as it breaks over that doji and after they are up 5 pips set the stop at be + 2pips or pennys, and when they get stopped they book that 2 pips as a win!!! Thats not a game I want any part of.

 

Of course you have the MANUAL scalpers that try trend following but will only buy on the bid and set the stop loss 2 ticks(lets say s&p futures) away and they keep hoping for that one move where it just keeps going and they are willing to get out at be to get that one 20 pip move. Or...I simply know traders who use 5 min bars to trade and as soon as price goes 3 pips or 3 incements in futures against them they jump out on the "theory" theat they can jump back in again when the trend resumes.(as if it ever stopped! lol). hERS WHAT I SEE IN MOST SCALP ROOMS. They try to buy the future on the bid, give it 15 seconds and if no fill then pay the offer,whatever it is..on getting out same thing, they try to sell on the offer, and wait 15 seconds. thats too much work for me!!!! -)

 

But any scalperish type style where a guy is usually looking to go in and out, in and out for like 2 hours, make a measly 100 dollars days pay and quit is an animal that I think The forex industry wants back and therefore it makes sense that they would have 1 pip spreads as they would love a guy that trades 4 times an hour round turn than twice per day. There seemed to be no reason for equitoes to get off decimalization as that 1/16 or "steeny" as we brokers called it seemed like nothing. Its like a 3.3 pip spread today in spot forex and we both know that at the end of the year its murder!!! They may even eventually offer 1/4 pip spreads as they devise ways to get your money in hidden fees but that would only be the small firms dealing with suckers.

 

Tell you another thing I learned as a professional poker player and also a casino dealer. In most poker games, if the house is cutting 5% each pt, there will be no winners as a rule by the end of the night. The pros argue since they play so tight and infrequently it doesnt addect them. Mathemeticians also argue that point. That the "cut' only affects the loose and bad players. But I know something they dont. What happens to that expert player who is sitting there for 3 hours or more just waiting to get that pair of aces or kings to jump in real aggressive and take the suckers money with? Well......depending on how much damage the house cut did at that point, he may wind up with half the size pot he would have had with no or a small cut becaus the bad players lost their money and went home as the cut ate them up!!! Do you see the analogy on a slightly longer term basis in our game. Equities, futures, forex, name it.......all the really bad traders whose money we need to feed off of are always disappearing...because they all died a death of "overtrading." Overtrading by itself should produce a break even result though. why should overtrading hrt? because of the spread, the the slippage,commission and all the antics they pull behind the schenes to make sure you are always paying too much and getting too little when getting out. dont ask me how, they do it. people think because they bought on the bid they got over? i will just say this, i worked for a firm that was a market maker in a stock that was .49bid/.50 offer. When people bought they paid 50 cents per share. when they sold (always months later for some reason lol) the bid went from .49 to .02 in 45 seconds. We'd call them back, tell them a huge seller came in, they should by some more!!!! so now they hold the stock another 6 months!!!! If the y called the regulators on my firm we had another mm go on the offer for us to say he knocked the stock down himself. 3 mms working in cahoots can outwit 99% of regulators. So many games they play i can tell you many, but anyway we are getting off topic, the legit regular spread, will eat up any scalper that exists. plus sooner or later he gets stuck in a trade and loses his whole weeks "pay" in one trade.we all know this......

 

BOTTOM LINE: Im day trading 5 years, swing trADING 15, and I can count on one hand how many traders who were making a living 5 years ago are even still around. where did theier money go? The spread monster. Picture a gremlin from pac man or a rat with sharp tiny teeth gobbling away at every trade you make. Let me prove something....remember in the late 90's a trader could make a fortune just following momentum and be flat by end of day. why are all those guys broke? because the bigger fool, the other traders who would take his stock off his hands went broke first, then the next level down and the next, and thenext. there has to be at least 50 levels of traders from the bottom of a move to the end of a move whether its a 5 min chart but especially if using day charts. as they grind out the traders who always buy at the top, guess what...................we have smaller and smaller tops for a while as thois eguys who make the hill into a mountain disappear and now we pros have to wait, sometimes many months, in a bad cycle, a couple of years for new suck- I mean traders to come around. The spread monster is always eating and unlike the lion, never sleeps.

 

Really excellent post - thanks!

 

BlueHorseshoe

[Vince50 10]

Really excellent post - thanks!

 

BlueHorseshoe

You are quite welcome. To me, if every trader asked themself this question before they placed every trade, its possible the Forex and even the stock market would no longer be exciting, as volume would get cut by 2/3! And that is "How much am I going to pay the house at the end of a year to keep making this trade? And if it is even profitable, will it be worth my time after the cut,commissions,stealing on the back end,and 50 things I cant figure out why my money is going faster in my account than my journal shows!

 

Let me know if I can help you in any way.

 

Oh, BTW...I may be interested in starting up a chat room if I can get someone to set it up for me and it would be free for the few of us who started it up, so if you know a few people that all like the same market or instruments, we can give it a shot. Better than paying money to a stranger,right?

[Perrin 10]

Tell you another thing I learned as a professional poker player and also a casino dealer. In most poker games, if the house is cutting 5% each pt, there will be no winners as a rule by the end of the night. The pros argue since they play so tight and infrequently it doesnt addect them. Mathemeticians also argue that point. That the "cut' only affects the loose and bad players. But I know something they dont. What happens to that expert player who is sitting there for 3 hours or more just waiting to get that pair of aces or kings to jump in real aggressive and take the suckers money with? Well......depending on how much damage the house cut did at that point, he may wind up with half the size pot he would have had with no or a small cut becaus the bad players lost their money and went home as the cut ate them up!!! Do you see the analogy on a slightly longer term basis in our game. Equities, futures, forex, name it.......all the really bad traders whose money we need to feed off of are always disappearing...because they all died a death of "overtrading." Overtrading by itself should produce a break even result though. why should overtrading hrt? because of the spread, the the slippage,commission and all the antics they pull behind the schenes to make sure you are always paying too much and getting too little when getting out.

 

That was an interesting post and an interesting thought. The house always wins (with their commissions and taxes), as all they have to do is sit back and skim a little off every trade.

 

Some day they will own everything and there'll be no one left. Or will there always be new customers / suckers to join in? Or is the pool of traders so large that it won't matter?

 

It is a finite number of players with a finite amount of money though, so if the game is played long enough, the only winner is 'the house' and everyone else is broke?

 

((Unless... I make my money now quickly before everyone else goes bust! Quick, to the stock exchange, I must make some trades!))

[Vince50 10]

Don't worry. With new people coming into trading all the time, the pool will never dry up. So don't rush!!! But it would be nicer though to have all the BAD TRADERS still trading from 2,3,4 or 5 years ago(usually the suckers in the beginning stage) AS WELL as the current pool of traders we have. But thats not what happens in real life. So lets make up a typical scenario, the numbers are all approximate of course.

 

 

15% of the least capitalized and/or least skilled traders go bust each year, but 16 or 17% new traders replace them every year and part of the 17% new blood, are some of the "old" traders who borrow money and are trying again. So every year stories of "easy money/easy life" written by the brokerage firms(The house) and the software vendors with their beach chair ads, suck in new money every year. Thus opportunity will ALWAYS be there. Im just saying though, that if we could keep the 20% worst traders in the game, keep them from going bust from over-trading, thats where 80% of the income for the rest of us would be. And thats on top of the new inexperienced 17% jumping into the pool each year!!! THEN IT WOULD BE MUCH EASIER TO MAKE A LIVING IN FOREX. You know the 80/20 rule. 80% of the bad players in any game supply 20% of the good ones. Problem is we keep losing the bad ones and have to replace them. . But don't worry, there will always be fresh faces to feed the machine. And when the trend starts to reverse and volume falls down, you know what happens. The industry will come out with new gimmicks as they are doing now such as 1)-10% bonus added to your account upon opening, 2-free charts 3-Free this and free that, all designed to feed that little Pac-man gremlin and keep his teeth chewing. A/K/A...THE HOUSE. Remember the house mouse or gremlin doesn't know if the money they are chewing up with spreads,etc., is the stupid money or the smart money. It all tastes the same to him. But yes there will be cycles of suckers drying up and thats why I personally think the turtles and all those guys from market wizards who made hundreds of millions of dollars, well...do you know how many people got taken out and how many accounts they had to destroy to get that money?

 

So simplify it this way. Before you ever hit yuour mouse button for the first time, you have 3 opponents waiting for you 1:The house 2-The banks and expert traders which incudes the manipulators who are also banks and traders on the other side of your trade. 3- You have YOURSELF, and this is where discipline DOES come into it.As well as LUCK in finding a system or set of tactics that will hold up long enough for you to double your account before it stops working. See, if the Turtles(best traders in the world,right?) would have started today, we may never have heard of therm, and they might all be driving a cab for a living. So LUCK (being in the right place and right time for "your" system) to be most effective is papramount. Some traders argue that if you cant stand the drawdown you are under capitalized and shouldnt be trading. But they never tell you if you were under capitalized or just not good enough when you went broke. So the key is you have to last. And to last in this business as far as Imk concerned, especially with accounts under 30k, you have to double your account size , so if we have a black swan event, or you go on tilt(as we poker players say) you can whether the storm....OR ......find out your system isnt good enough. How about my story, I waited 3 years while just investing in things I know about till I finally made the move to become a day trader as I was promised to be backed for life even if I lost my initial investment,. The firm was bankrupt 12 months later.(Thank God I got some intense training in that year, at least) Then I save up money to start again on my own, and my mother dies, and I go thru all my trading money just to live. So anyone who tells you if you want it bad enough, you'll DEFINITELY succeed in trading....is either lying or they are not wise. Or they have a softwere system to sell you that with enough dedication(they always seem to put it on you) youll be working 3 hours a day enjoying the good life...too!!! Yeah, OK.

 

This leads to another reason we lose 95% or more of our retail traders. No matter how well they are capitalized, most of them either blow their whole account on one system by being to stubborn(overly disciplined? lol) or jumping from one thing to another. Sadly by the time we find out which group we are in, we went broke. Oh....and I would like to make a large wager that many of the "Market Wizards" wont tell you how much money they REALLY had to beg,borrow or steal till they made it." Once you are a success....you can re-invent your whole biography as they say. Let me just say I would not want to know the number of wives and girlfriends who have no bank account and all their credit cards are maxed OUT, and maybe even lost their home because their man said "Baby this time I know it will work." You never hear those stories.

 

And after 15 years of bad luck, bad experiences and studying my butt off, I am finally on my way. How many of you out there would starve for 15 years if that was the price you had to pay to succeed as a trader? It isn't for everyone. Hey we should start a thread on that one. Some one go for it! Lesson Done.

[Vince50 10]

Wow, I am really enjoying sharing my experiences with all of you here as this forum has some newbies that honestly want to learn, no just talk. My opinion, other than asking questions, and do that a lot, no one should do more posting than reading until they are winners. Till then, keep asking the questions and reading the threads and culling all the free gold out there that pre-Internet days, you'd never find in 100 years. The old 80/20 rule again.

 

Anyway, when I embarked on my career as a professional poker player, I found that there were 2 ways I could make money.

 

#1-You have to keep increasing your skills so that as smart as the players you are playing with, you are a little smarter.

 

#2- Find a game with much worse players than you so you automatically are the best player in the game!!!***

 

Do any of you see the correlation between poker and Forex trading. The best way of course is to do both because unlike poker we aren't going to get any easy games to pick off as I did in Vegas in the 80's. By the way, now that so many people are into poker via the Internet and TV coverage of the big tournaments. Guess what......I am no longer good enough to have an edge I can "count" on to make a living week in and week out as in the 80's. So, what is the way a trader would find an "easy" game since there aren't any,really. I have a few ideas but I will share one. That is, you keep trying your system on different "instruments" until you click with the way the mindset and the herd of the players in that instrument think. Specialize! For example, I went from individual stocks, to triple leveraged ETF's, to futures(Gold, mid cap 400's,etc) to finally Forex. I advise even if you know what you want to trade, until you are doing it professionally that you look at all 3 markets-Spot Forex,Futures,Individual stocks/indices. You will discover that each has a different personality ,but at different times. And you may start out loving stocks because you love playing those big gap ups in the morning(that was my thing), but then find that gold trends better and that for some reason The spot currency pairs dont seem to move fast enough to suit you. Lets be honest, its very easy to find a stock that will move 3% a day,almost every day. But when was the last time a Forex pair moved that much.

 

So look at all 3 markets and this way by seeing the differences among instruments, you will then see more clearly what is different about the instruments YOU! want to trade.

 

Lets end on this note.....take a guy who is trading gold in this market. Ask him why he is not trading silver as well. After all, they move in correlation, yes? Find a man who is successful trading the EUR/USD but never trades GPD/USD! Ask him why. Think about that, and many new doors of perception of markets will open for you.....

 

Feel free to PM me with any questions if they are serious.

 

***-Remind me next week to tell you what bad players in poker do that bad players in trading do that are identical! (Yes, over trading is one of them. lol)

[michael45 10]

Does anyone have a consistent (> 2 years) track record of multiple time frame trading? Would you be willing to share your experiences? (private or public)

 

I have spent a number of years on multiple time frame trading. The concept at the time seemed appealing and “logical”. When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money.

 

It also seemed appealing to have more market opportunities because one is trading a lower time frame.

 

Somehow I just never worked for me. It never made more money than just trading End of Day.

 

There are enough stories and articles on the internet that multiple time frame trading “works”. However, in the last 12 years I have come across only one trader with consistent and actual results.

 

I would be interested to hear other people’s experience with factual results or with trade examples posted before they actually happen.

 

Many people like to share their experience with them , But you want to get acttraction from them to get experience of them.